Review By on August 31, 2016
Riddhi Steel and Tube Ltd (RSTL) engaged in the manufacturing of black and galvanized steel pipes in the various sizes having wide application in varied industries including power sector, agro based industries, construction industries, structural, scaffolding, irrigation and engineering industries, air and gas transportation, firefighting applications etc. The company also manufactures steel square hollow sections (SHS) and rectangular hollow sections (RHS) in a various size and thickness.
To meet its working capital and general corpus funds requirement, the company is coming out with a maiden IPO of 2340000 equity share of Rs. 10 each at a fixed price of Rs. 38 per share to mobilize Rs. 8.89 crore. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Issue opens for subscription on 02.09.16 and will close on 07.09.16. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME. Except for few shares being offered at a price of Rs. 40 per share in March 2011, from inception till July 2013, it raised equity at par. Post IPO its present paid up equity capital of Rs. 5.95 crore will stand enhanced to Rs. 8.29 crore.
On performance front, for the last three fiscals, the company has reported turnover/net profit of Rs. 207.27 cr. / Rs. 2.29 cr. (FY14), Rs. 234.97 cr. / Rs. 2.53 cr. (FY15) and Rs. 236.78 cr. / Rs. 2.66 cr. (FY16). If we attribute latest earnings on fully diluted equity post IPO, then asking price is at a P/E of 11 plus against industry composite of 9 plus, thus it has nothing on table for new investors in near term.
On merchant banker’s front, the merchant banker had some issues in the past that stands suspended by watchdog. This is the 22nd mandate from its stable and earlier mandates have shown mixed trends.
Conclusion: Based on latest earnings as per prospectus, the issue appears to be fully priced. However, risk savvy cash surplus investors may consider investment for long term.
Review By on August 31, 2016
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Riddhi Steel & Tube Ltd. offers an early investment opportunity in Riddhi Steel & Tube Ltd.. A stock market investor can buy Riddhi Steel IPO shares by applying in IPO before Riddhi Steel & Tube Ltd. shares get listed at the stock exchanges. An investor could invest in Riddhi Steel IPO for short term listing gain or a long term.
Read the Riddhi Steel IPO recommendations by the leading analyst and leading stock brokers.
Riddhi Steel IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Riddhi Steel IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Riddhi Steel IPO?"
Our recommendation for Riddhi Steel IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Riddhi Steel IPO.
The Riddhi Steel IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Riddhi Steel IPO allotment status to check.
